Advertisement
With the election approaching, we asked a financial planner to break down the issues that will hit your wallet.
With the federal election fast approaching (Canadians go to the polls October 21, 2019), the Liberals, Conservatives and NDP have all made campaign promises that could directly affect your bottom line.
While the Green Party of Canada, Bloc Québécois and People’s Party of Canada have also proposed some interesting personal finance measures (scroll to the bottom for highlights), the focus of this summary is on the frontrunner national parties.
Here, category by category, is a quick look at what each of the three has promised regarding the big items, including income tax changes, housing, families and seniors. We will update this information in the lead-up to Election Day as more announcements are made.
Liberals
The Liberals have proposed an increase in the amount of income Canadians can earn before they must start to pay federal tax, to $15,000, up from $12,069 in 2019.
The party also pledges to reduce corporate tax deductions on debt that businesses use to reduce the amount of income tax they must pay. In other words, this change would result in incorporated businesses paying more income tax. And it would affect not only large corporations but any firm or even individual whose business is incorporated.
Conservatives
The Conservatives want to decrease the federal tax rate on income under $47,630 by 1.25% over 3 years, and introduce a Green Public Transit Tax Credit.
Several tax credits would be reintroduced, including the $1,000 Children’s Fitness Tax Credit and $500 Children’s Arts and Learning Tax Credit.
They would amalgamate federal and provincial tax returns in Quebec, so Quebec residents can file a single tax return.
For corporations, the Conservatives have promised to roll back some of the corporate tax changes implemented by the Liberals, particularly to reintroduce the ability for a business owner to split income with their spouse and potentially pay less tax as a family.
New Democrats
The New Democrats have proposed a “super-wealth tax” affecting Canadians whose wealth totals more than $20 million. Each year, these taxpayers would owe 1% of the total value of their assets, including real estate, investments, and even cars and jewellery.
The NDP also plan to increase the capital gains tax inclusion rate from 50% to 75%, meaning Canadians would pay more tax on profits on investments in non-registered accounts, cottages, rental properties and other taxable capital gains.
They would increase the top federal tax rate for individuals earning more than $210,371 annually by 2% (the rate is currently 33%).
And they want to make it easier to pass along a family business to the next generation by ending the “unfair tax treatment” of family transfers.
Their universal pharmacare plan to increase public funding for prescription drugs could reduce health plan costs for business owners, as well as out-of-pocket medical costs for other taxpayers.
Liberals
The Liberals have proposed a federal tax on vacant properties owned by non-residents, with an aim to cooling the housing market so owning becomes more affordable, as well as building 100,000 affordable homes over the next 10 years.
They have also promised $15 million in funding for homeless veterans, as well as spending on housing and infrastructure for Indigenous communities.
Conservatives
The Conservatives would increase the maximum amortization for first-time homebuyer mortgages to 30 years from 25 years and ease the mortgage stress test, with an aim to making home-buying more accessible.
They would make any surplus federal real estate available to use for housing development to increase affordable housing.
They would also introduce a federal tax credit for up to $20,000 spent on energy-saving renovations like high-efficiency heating and cooling, solar panels and window replacement.
New Democrats
The NDP has committed to building 500,000 housing units over the next decade as part of its plan to increase affordable rentals, and kickstart it with a $5 billion commitment within the first 18 months of taking power.
Another initiative to help renters is the waiver of the federal portion of the GST/HST on the new construction of rental units.
The party would also reintroduce 30-year mortgage amortizations for first-time homebuyers for entry-level homes, thereby decreasing monthly payments.
The New Democrats have also proposed doubling the Home Buyers’ Tax Credit from $750 to $1,500 and levying a 15% Foreign Buyers’ Tax to cool the housing market, so homes become more affordable.
Liberals
The Liberals would make maternity and parental benefits tax-free and increase the Canada Child Benefit (CCB) by $1,000 more for parents of children under the age of one (up from the current maximum benefit of $6,639 for all children under 6).
They also promise a 10% decrease in before and after school care costs, and an additional 25,000 childcare spaces.
The Liberals have proposed an increase of $1,200 per year to the Canada Student Grant. They also want to make student loans interest-free for two years after a student graduates, and payments would not begin until their incomes exceeded $35,000 annually.
Conservatives
On the same page as the Liberals, the Conservative Party would make maternity and parental benefits tax-free.
They would increase the Canada Education Savings Grant (CESG) from 20% to 30%, increasing the government contribution to Registered Education Savings Plans (RESPs) by up to $250 per year, depending on the parents’ contribution.
New Democrats
The NDP commitment to childcare includes $1 billion in 2020, and more each year thereafter, to increase affordable childcare.
They also have a goal of eventually offering free college and university tuition, starting with tuition reductions in partnership with the provinces and territories.
The party would further reduce post-secondary costs by increasing the Canada Student Grants program and making federal student loans completely interest-free.
Liberals
The Liberals have proposed to increase Old Age Security (OAS) by 10% once seniors turn 75, as well as to boost the Canada Pension Plan (CPP) survivor benefit for spouses by 25%.
Conservatives
The Conservatives propose an increase to the Age Tax Credit by $1,000 for seniors earning under $87,750.
New Democrats
The NDP has proposed making the federal Caregiver Tax Credit refundable to all taxpayers, not just those with tax payable, to ensure caregivers with low incomes receive federal tax incentives even if their income is too low to pay income tax.
The Green Party of Canada has proposed working towards universal pharmacare, free university and college, and forgiving federal student debt to bring down the cost of living. They also want to boost the income replacement ratio of the Canada Pension Plan from 25% to 50% of the Year’s Maximum Pensionable Earnings (currently $57,400) to increase retirement income.
The Bloc Québécois wants to increase the Guaranteed Income Supplement (GIS) for low income seniors in an effort to increase their government pensions. They also want to allow Revenu Québec to be responsible for the collection of federal income taxes so that Quebecers can file a single income tax return (like the Conservatives).
The People’s Party of Canada has suggested a simpler two-tax-bracket federal tax, instead of the current five tax brackets, with tax reductions for low and high income earners: 15% tax would apply to income under $100,000 (instead of up to 26%) and 25% for income in excess (instead of up to 33%). The first $15,000 of income would be exempt from federal tax (instead of the current $12,069 exemption) and the capital gains tax for non-registered investments, cottages, rental properties, businesses, and similar taxable capital assets would be eliminated.
Compare the Best Savings Accounts in Canada* >
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.
Affiliate (monetized) links can sometimes result in a payment to MoneySense (owned by Ratehub Inc.), which helps our website stay free to our users. If a link has an asterisk (*) or is labelled as “Featured,” it is an affiliate link. If a link is labelled as “Sponsored,” it is a paid placement, which may or may not have an affiliate link. Our editorial content will never be influenced by these links. We are committed to looking at all available products in the market. Where a product ranks in our article, and whether or not it’s included in the first place, is never driven by compensation. For more details, read our MoneySense Monetization policy.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Canadians with no children or siblings must consider estate planning alternatives. Here’s why trust companies can be a good...
The federal government’s capital gains inclusion rate increase has yet to become law. There’s a slight chance it may...
Canadians have reporting requirements for foreign assets, income and tax paid. Here’s how to claim each of these on...
A Certified Financial Planner provides perspective on the TFSA vs. RRSP question for a couple in their late 50s...
In retirement, some income is not subject to withholding tax, and you may potentially owe tax after filing each...
Some strategies are time-sensitive, while others can help you start the new year on the right foot.
Sometimes, it’s not action, but inaction, that can hurt you financially. Here are examples of when selling may be...
Do Canadians need to consolidate RRSP accounts before converting to RRIFs? Find out this and more.
Here’s a primer for Canadians on choosing between employment and self-employment for a new work arrangement.
You can use a HELOC for leveraged investing. But what happens if you sell your home and want to...